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Opinion

Opinion

Based on the author’s interpretations and judgments of facts, data and events.

As economy falters, Stephen Harper offers more restraint: Goar

If you have a sense of déjà vu as Canada’s 42nd general election approaches, there is a reason.

Here is what then-finance minister Jim Flaherty said in 2008 as the economy started to wobble. “We are well positioned to weather this period of global uncertainty. Canada’s economic fundamentals are solid.” Here is what Finance Minister Joe Oliver said last week as the economy shrank for its fourth consecutive month. “We’re not in a recession. We don’t believe we will be in a recession.”

Here is what Stephen Harper said in 2008. “This country will not go into recession next year and will lead the G7 countries.” Here is what the prime minister said last weekend. “Every expert in the world thinks that this country is going to grow as the year goes on and has some of the best prospects looking forward.”

Then, as now, external shock waves were buffeting Canada. In 2008, the meltdown began in New York. This time, there are two sources of upheaval: the eurozone and China.

Then, as now, Canada had deep structural problems. In 2008, the manufacturing sector was deteriorating. This time, Canada’s over-dependence on the energy sector has heightened our vulnerability to foreign jolts.

Then, as now, the statistics told a mixed story. Although investors were jumpy, the job market was calm, the housing sector was solid and the federal budget was balanced.

Then, as now, most private forecasters were hedging their bets.

With hindsight, Canada was in a severe recession in 2008 when the Conservatives flashed their all-clear signals. On Sept. 1, Statistics Canada will tell us whether Canada is in a recession now. That is when the federal agency releases its economic growth numbers for the first half of 2015.

There are differences between the past and the present.

In 2008 forecasters were projecting the longest, deepest economic trough since the 1930s. Today most anticipate a mild recession.

Seven years ago, no Canadian bank contradicted the government’s sanguine view. This time, the Toronto-Dominion Bank has broken ranks. “It is likely the economy was in a recession in the first half of the year,” said Randall Bartlett, the bank’s senior economist last week. “The second half of the year is also likely to be weaker than previously expected.”

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Back then Harper had little difficulty convincing voters that his rivals — Stéphane Dion and Jack Layton — were unfit to steer the economy through turbulence. Now, after four years of slow-to-sputtering growth, Canadians have doubts about Harper’s helmsmanship and they’re less willing to write off Thomas Mulcair and Justin Trudeau as inept amateurs.

To put all this in perspective, two political constants need to be taken into account: Every finance minister downplays the threat of a recession to avoid rattling the markets or shaking public confidence. Every opposition leader accuses the government of economic mismanagement to fuel the public appetite for change.

Looking at the broad sweep of Canadian history, there is no strong link between recessions and electoral defeats. Harper won in 2008, despite the economic storm signals. Louis St. Laurent won in 1953 as the economy contracted but he was routed four years later by John Diefenbaker. Joe Clark lost in 1980, but the slowing economy was the least of his woes. No other general elections were held during recessions.

Limited as the pattern is, it suggests economic downturns compound — rather than cause — a government’s misfortunes. Voters know the business cycle will always churn and events abroad will always affect Canada. They look for a leader they trust, regard as competent and consider most likely to act in their interests. They weigh the record of the governing party and the availability of credible alternatives.

So does it matter if Canada is in a recession? Not to voters who are insulated from the swings of the marketplace. But they are a shrinking minority. Most Canadians live paycheque to paycheque. They string together contracts, temporary jobs or part-time positions. They have no workplace benefits and no savings to fall back on. Every economic tremor puts their livelihood at risk.

That does not necessarily mean the Conservatives will be toppled in October. It means Harper’s prescription — a mix of denial and restraint — will be hard to sell to the jaded electorate of 2015.

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